{"id":28382,"date":"2012-03-19T10:20:14","date_gmt":"2012-03-19T14:20:14","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2012\/03\/19\/investing-in-state-owned-monopolies\/"},"modified":"2012-03-19T10:20:14","modified_gmt":"2012-03-19T14:20:14","slug":"investing-in-state-owned-monopolies","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2012\/03\/19\/investing-in-state-owned-monopolies\/","title":{"rendered":"Investing in State-Owned Monopolies"},"content":{"rendered":"<div align=\"left\"><script type=\"text\/javascript\">\ntweetmeme_style = 'compact';\n<\/script><br \/>\n<script type=\"text\/javascript\" src=\"http:\/\/tweetmeme.com\/i\/scripts\/button.js\"><\/script>\n<\/div>\n<div><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-28287\" title=\"Investing in State-Owned Monopolies\" src=\"http:\/\/www.investmentu.com\/wp-content\/uploads\/2012\/03\/state-owned-monopolies.jpg\" alt=\"Investing in State-Owned Monopolies\" width=\"220\" height=\"220\" \/><\/p>\n<p>Just why is it that so many people are bad at the game of monopoly?<\/p>\n<\/div>\n<p>Growing up, our family monopoly games were raucous affairs with a lot of shouting (and when necessary, wrestling). My younger brother John was always in charge of the cash because no one else was deemed trustworthy.<\/p>\n<p>In retrospect, most of my six siblings never really got the game at all. They carefully managed their cash and picked up random properties. This allowed them to stay in the game for a long time but made ultimate victory impossible.<\/p>\n<p>As for me, I always went for the kill with a strategy of feast or famine.<\/p>\n<p>It was either a great monopoly, like Boardwalk and Park Place, or I would crash and burn and then bolt to play basketball with the neighborhood gang.<\/p>\n<p>Just why is it that so many people are bad at the game of monopoly?<\/p>\n<p>I think it\u2019s because we\u2019re taught at a tender age that tycoons adept at cornering markets are the greedy bad guys. This belief is compounded when we go to college and economics professors rant about evil monopolies and the need to \u201cregulate\u201d the free market.<\/p>\n<h2><strong>Enter Carlos Slim<\/strong><\/h2>\n<p>Apparently, Carlos Slim, the wealthiest tycoon in the world according to <em>Forbes<\/em>, never studied economics.<\/p>\n<p>Carlos Slim\u2019s fortune was built on the back of Mexican telecom monopolies and, as a hobby, he bailed out <em>The<\/em> <em>New York Times<\/em>. Companies controlled by Slim have captured 80% of Mexico\u2019s telephone lines, 70% of the cellphone market, and account for an incredible 34% of the value of the country\u2019s entire stock market.<\/p>\n<p>Maybe monopolies aren\u2019t all that bad?<\/p>\n<p>Lasting monopolies are tough to find in America, but there are plenty of them in <a title=\"Emerging Markets Site Map\" href=\"http:\/\/www.investmentu.com\/sm_emergingmarkets.html\" target=\"_blank\">emerging markets<\/a>.<\/p>\n<p>Why?<\/p>\n<p>The best way to convince government regulators to protect your market is to be owned by the government itself.<\/p>\n<p>And there are many of these monopoly-like state-owned and -controlled giants in emerging and <a title=\"Investing in Asia\u2019s Frontier Markets\" href=\"http:\/\/www.investmentu.com\/2012\/March\/investing-in-asia-frontier-markets.html\" target=\"_blank\">frontier markets<\/a>.<\/p>\n<h2><strong>China Mobile: The Poster Child<\/strong><\/h2>\n<p>The poster country of this \u201cstate capitalism\u201d is China and one high-profile monopoly is <strong>China Mobile<\/strong> (NYSE: <a href=\"http:\/\/www.google.com\/finance?q=CHL\" target=\"_blank\">CHL<\/a>). The government\u2019s 70% ownership stake is a strong incentive to protect the company\u2019s dominant market position.<\/p>\n<p>So despite my strong personal distaste for state capitalism, now may be a good time to look at China Mobile when many are questioning the country\u2019s growth prospects.<\/p>\n<p>For 2011, the company&#8217;s customer base grew 11.6% to reach 650 million with profits of $19.9 billion. As a defensive consumer business with a 4.1% <a title=\"Dividend Aristocrats: The Most Profitable Force in the Universe\" href=\"http:\/\/www.investmentu.com\/2012\/March\/dividend-aristocrats.html\" target=\"_blank\">dividend yield<\/a>, CHL should hold up rather well in the toughest of markets.<\/p>\n<p>This stock has done a lot better than that so far in 2012 \u2013 up 15.5%. Despite this impressive surge, the stock is trading at only a bit over ten times 2012 expected earnings.<\/p>\n<p>China Mobile\u2019s trump card is a $50-billion stockpile of cash reserves ($13 per share) that is sure to cover (or buy out) even the most intrepid of its competitors.<\/p>\n<p>So don&#8217;t be shy about <a title=\"Follow Carlos Slim and Fatten Your Portfolio\" href=\"http:\/\/www.investmentu.com\/2011\/June\/carlos-slim-investing.html\" target=\"_blank\">investing in monopolies<\/a>. After all, only one company (Parker Brothers) makes the game of monopoly.<\/p>\n<p>Good Investing,<\/p>\n<p>Carl Delfeld<\/p>\n<div>\n<a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=b3LhEuywARs:zHVkFn2Lc-8:yIl2AUoC8zA\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=yIl2AUoC8zA\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=b3LhEuywARs:zHVkFn2Lc-8:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=b3LhEuywARs:zHVkFn2Lc-8:V_sGLiPBpWU\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=b3LhEuywARs:zHVkFn2Lc-8:qj6IDK7rITs\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=qj6IDK7rITs\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=b3LhEuywARs:zHVkFn2Lc-8:gIN9vFwOqvQ\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=b3LhEuywARs:zHVkFn2Lc-8:gIN9vFwOqvQ\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=b3LhEuywARs:zHVkFn2Lc-8:F7zBnMyn0Lo\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=b3LhEuywARs:zHVkFn2Lc-8:F7zBnMyn0Lo\" border=\"0\"><\/img><\/a>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/InvestmentU\/~4\/b3LhEuywARs\" height=\"1\" width=\"1\" \/><\/p>\n<p>Article by <a href=\"http:\/\/www.investmentu.com\/\" target=\"_blank\">Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Just why is it that so many people are bad at the game of monopoly? Growing up, our family monopoly games were raucous affairs with a lot of shouting (and when necessary, wrestling). My younger brother John was always in charge of the cash because no one else was deemed trustworthy. In retrospect, most of &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.investmacro.com\/fx\/2012\/03\/19\/investing-in-state-owned-monopolies\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Investing in State-Owned Monopolies&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-28382","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28382","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=28382"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28382\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=28382"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=28382"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=28382"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}